COVID in Canada – The Problem with Income Support (Update)

The die is cast. Canada’s governments can now count, at least temporarily, on four major measures to support the income of people affected by the COVID crisis, namely:

1. The Wage Subsidy amounting to 75% of salary up to a maximum of $ 3,388 per month ($ 847 X 4), offered to employers who maintain the employment ties;
2. Employment Insurance (EI), which offers 55% of the maximum insurable salary up to a maximum of $ 2,292 per month ($ 573 X 4), which program is now closed and whose claims are redirected;
3. The Canada Emergency Response Benefit (CERB), which temporarily takes over from EI by offering a lump sum of $ 2,000 per month and
4. Social assistance for others with $ 690 per month for a single person “without coercion at work” in Quebec.

The Quebec government’s Temporary Help Program for Workers (PATT COVID-19), for those who are not eligible for another financial assistance program, will be closed as of April 10, 2020.

It is clear that there are four categories of unemployed people because of COVID. If this is temporarily an arguable case given the need to rapidly deploy a widely accessible income support, one can easily see an inequity that cannot last beyond the initial period. In fact, these are direct relief measures in a disaster situation rather than stimulus measures which will have to be applied pending the return of full employment, which could be very long, depending on the duration and scope of the lockdown.
We believe that this situation is untenable in the longer run. Sooner or later, we will have to talk about EI management.

The fund belongs for 2/3 to employers and to 1/3 to workers. SMEs and their employees are largely burdened with its funding. As much as 60 billion $ were diverted from the Fund over the years to reduce the federal deficit. Now, employers, who have contributed for decades, and their employees, often SMEs, have had the door shut before their noses. However, this $ 60 billion is enough money for an immense improvement in benefits, to widen access to the Plan and to modernize systems. Nothing had been done. It’s a shameful fiasco. Employers and their employees will need to regain control of the Fund.

In fact, the CERB and the Wage Subsidy would have been useless had it not been for this gross negligence.

The situation is similar in the USA. Some States are currently looking for COBOL programmers to “revamp” their obsolete computer systems.

The economic world must react …

In addition, beyond income support, it should be noted that the EI Plan provides the main source of funding for training for the unemployed in Canada, whether they are recipients or not. However, the digitalization of the economy is taking place at a high speed while the skill gap in digital literacy skills already affects almost half of active Canadian. In short, the training needs will be immense, both for “reskillings” and “upskilling”. Funds dedicated to training will need to be increased.

Public employment services, such as the deceased Emploi-Québec, which has become “Services Québec” and whose operations are largely financed by the Plan, will have an immense contribution to make in this context. They should already be on the move to offer online training and employment services, as it will take a long time before services can be offered face-to-face. Pôle Emploi, in France, has already started to move …
In short, it will be necessary to go far beyond the CERB and a guaranteed minimum income.

Please, excuse my english as it is not my mother tongue. Fell free and welcomed to comment

Michel Cournoyer
Editor